BBVA issues eurozone's largest ever senior green bond

BBVA today tapped the markets, issuing the largest ever green bond (€1 billion) by a eurozone financial institution. The 7-year non-preferred senior green bond makes BBVA the first Spanish bank to issue such debt instrument. High demand -three times higher than the bond’s value– allowed it to lower the price to mid-swap plus 80 basis points.

“We are committed to sustainable finance, and this issue is yet another example,” BBVA CEO Carlos Torres Vila said.

BBVA’s inaugural €1 billion green bond issue, the largest ever of its kind in Europe, sparked tremendous interest among investors. In just three hours, the order book rose to over €3 billion. Excess demand allowed to lower the price from mid-swap plus 95 basis points to mid-swap plus 80 basis points. The chosen instrument, non-preferred senior, also surprised investors, more used to other types of green bonds, such as mortgage-backed securities or preferred senior bonds.

The SRI investors represented 51% of the allocation . By countries, the majority of the investor orders came from France (40%), Germany & Austria (17%), Nordic countries (11%), Benelux (8%) y and the United Kingdom and Ireland (also 8%). By investor type, the orders were place by fund managers (77%), insurance companies and pension funds (18%), and banks (9%), among others.

“We are committed to sustainable finance, and this issue is yet another example,” BBVA CEO Carlos Torres Vila said

What is a green bond?

A green bond aims to grow the role of the bond markets, making it a key player in the financing of projects that contribute to environmental sustainability. Funds raised through green bond issues are exclusively allocated to financing or refinancing eligible green projects, in part or in whole, and whether new or existing.

Bond issues: Based on the Green Bond Principles, within the Social Bond Principles and the Sustainable Bond Guidelines of the ICMA, the bank will also publish the framework linked to the Sustainable Development Goals required for the issue of its own sustainable bonds

First Spanish bank to commit to the Science Based Targets Initiative to certify that emission goals are consistent with the decarbonization level required to meet the 2ºC goal set for 2050

Renewable power pledge: BBVA has pledged to deliver 70 percent of its energy consumption with renewable sources by 2025, and to cut its CO2 emissions by 68 percent

Fossil fuels: In line with its commitment to transparency, the bank reveals its total exposure to fossil fuels as 3.4 percent of its total assets

BBVA’s first green bond arrives just days after the bank published its framework for the issue of sustainable bonds, which is linked to the United Nations’ Sustainable Development Goals. This framework meets the demands of those investors who are interested in fighting climate change. With these types of issues, the bank channels funding to the financing of projects in sectors such as renewable energy, energy efficiency, waste management, water treatment, and access to essential needs and services like housing and inclusive financing.

This type of instrument complies to the new requirement for loss-absorbing liabilities, as calculated by standards such as MREL in Europe. BBVA is one of the few European banks that has fully adopted the hybrid capital requirements (both AT1 and Tier 2). With today’s issue, the bank strengthens its potential loss-absorbing liability cushion. In 2018, BBVA hopes to issue between €2.5 and €3.5 billion using this instrument, a figure that is variable depending on market conditions. It also intends to maintain its highly strategic approach to format, market timing, and term.

Human rights are an essential element of BBVA’s purpose: “to bring the age of opportunity to everyone.” Its Commitment to human rights, approved in 2018, sets the foundations for further progress in that direction, involving all the people who work in BBVA’s ecosystem.

Other interesting stories

Subscribe to our Newsletter and receive our news at the moment by mail

Receive in your email the latest information on mortgages: products, tips and recommendations to make the best decision.

To improve the quality of our services, to provide a pleasant experience and to analyze your navigation habits as a user of the Site to show users advertising related to their preferences, please note that we use proprietary and third-party cookies. If you continue browsing the Site we assume that you accept the use of cookies.

If you want to change your settings or check more information, you can access our cookie policy by clicking here.